New York’s Emerging Offshore Wind Market

 

Government and Industry Leaders Discuss Policy and Business Challenges in This Evolving Sector

 

December 2, 2019

 

***Alicia Barton was unable to attend due to weather. John Williams and Matt Vestal from NYSERDA spoke in her absence.

Kevin Knobloch
President, New York OceanGrid LLC at Anbaric

Clint Plummer
Head of Market Strategies and New Projects, US at Ørsted

Rudolph Wynter
President and COO, Wholesale Networks and US Capital Delivery National Grid

 

Moderated by: Robert Catell, Chair, National Offshore Wind Research and Development Consortium

 

 

Jump to Audience Questions

Event Summary: New York’s Emerging Offshore Wind Market

OurEnergyPolicy (OEP) hosted a panel discussion on New York State’s emerging offshore wind market, and the policy and business challenges facing this evolving sector, in its Energy Leaders Luncheon Series December 2019 event in New York City.

John Williams, Vice President of Policy and Regulatory Affairs at New York State Research and Development Authority (NYSERDA) gave keynote remarks. Williams’ remarks were followed by a panel discussion among Clint Plummer (Head of Market Strategies and New Projects, US at Ørsted), Kevin Knobloch (President of New York OceanGridLLC at Anbaric), Rudolph Wynter (President and COO, Wholesale Networks and US Capital Delivery at National Grid), and Matt Vestal (Senior Advisor for the Offshore Wind Team at NYSERDA). Bob Catell—Chairman of the National Offshore Wind Research and Development Consortium, and OEP Board member—moderated the discussion.

Keynote

NYSERDA’s John Williams opened the event with an overview of the work of NYSERDA and New York State to procure renewable energy—including offshore wind—and reach greenhouse gas targets in the Climate Leadership and Community Protection Act (set to reduce in-state greenhouse gas emissions by 85% by 2050).

He said New York’s target for offshore wind is 9,000 megawatts (MW) by 2035 and that offshore wind companies have responded to NYSERDA’s solicitations with more projects and at better price points than his team anticipated. NYSERDA sees strong potential for new job opportunities from the offshore wind industry in New York State. “The market is already poised for next iterations of where we need to go and where we need to be,” Williams said.

Panelist Remarks

Clint Plummer is the head of market strategies and new projects for Ørsted, the world’s largest owner, developer, and operator of offshore wind. Ørsted built the first offshore wind farm off the coast of Denmark in 1991, and acquired Deepwater Wind, which in 2016 built Block Island Wind Farm—the first and only offshore wind farm in the United States. He said U.S. offshore wind got its start when a group of companies recognized the potential for this technology in the United States, based on the work Europe had done, and began to advocate for policies that have grown demand for offshore wind in the United States.

“Offshore wind… is not a silver bullet solution that works everywhere and anywhere,” Plummer said. “It works in places where other forms of generation are difficult and expensive to operate, if at all.”

He said the Northeast coast has a “unique confluence of factors” that makes offshore wind one of the more cost-effective forms of new power generation: (1) electric demand, (2) strong wind in the American Northeast, referred to by some meteorologists as the “Saudia Arabia of wind,” and (3) a shallow, flat continental shelf that allows wind developers to construct very cost-effectively. Ørsted is currently developing a 3 gigawatt (GW) portfolio in the United States.

“[The industry] has got a lot of fundamental reasons why it makes sense,” Plummer said. “Now there are just some policy challenges that have to be unlocked.”

While European countries typically have a consolidated single permitting and regulatory framework, new wind projects in the United States need to go through multiple federal, state, and local approvals. Plummer said they had to get more than 20 different approvals for the Block Island Wind Farm. Getting projects approved requires a “very concerted, very delicate approach,” he said, and state and local communities can have a big voice in slowing down projects.

Kevin Knobloch is President of New York US Ocean Grid LLC, which leads Anbaric’s efforts to develop offshore wind transmission in New York. He said Anbaric is advocating for a planned approach to an open access transmission grid.

A new report by Wind Europe Industry Group is recommending a yearly $8 billion investment in the transmission grid in Europe to reach its potential to build 450 GW of offshore wind by 2050, and Knobloch said the United States also needs to invest in transmission to reach our offshore wind goals. He said “it’s no accident that Texas has one fourth of all installed wind capacity in the country,” given its focus on planning transmission, holding a transmission-only procurement, and developing competitive renewable energy zones. Maine, on the other hand, has struggled to reach its goals, in large part because of the challenges in the state’s transmission system and its failure to address those issues.

Knobloch applauded New York Governor Cuomo and his team for thinking about planned transmission and the New York Public Service Commission for its first round of offshore wind procurement. He said the role of innovation is also important to reach our offshore wind goals and solve some of the near-term problems.

Offshore wind has the potential to generate jobs for many different occupations, including construction, finance, law, science, engineering, and telecommunications, Knobloch said. He emphasized the importance of setting public policy goals that lead to greater competition, innovation and affordability, and that keep costs down. He said reliability, redundancy (what if one of the offshore platforms go down?), and resilience (the ability to weather hurricanes and tropical storms) are other features of offshore wind power to keep in mind.

Rudolph Wynter is the President and COO of Wholesale Networks and US Capital Delivery for National Grid, which oversees one of the largest electric transmission networks in the northeast. Wynter said that as transmission owner and system operator in the United Kingdom (the largest offshore wind market in the world), National Grid has deep knowledge in how offshore wind operates and integrates into the grid.

He said that by 2030, the United States is projected to be the fourth largest offshore wind market in the world, which is “really going to be a seachange in how we generate electricity,” he said. And “it’s going to be a huge change in also how we deliver electricity onto shore and onshore in maintaining reliability and resilience.”

Wynter said he sees three challenges with offshore wind infrastructure in the United States: (1) we need more effective and efficient construction to connect radial lines from offshore wind to onshore grids, (2) space constraints and capacity constraints to existing substations—we need to debottleneck and remove constraints on existing transmission networks, and (3) construction in shoreline communities—we need to adequately plan new construction so that infrastructure is an enabler and not an inhibitor and so that it doesn’t slow down growing businesses.

“I do think we’ll get through these challenges,” Wynter said. “We’re at a critical point now that’s very exciting because we’re doing nothing short of actually changing all of our energy systems forever.”

Bob Catell, the moderator and OurEnergyPolicy board member, introduced the National Offshore Wind Research and Development Consortium. Catell is the Chairman of this organization, which is funded by NYSERDA and the U.S. Department of Energy to develop new technologies necessary to bring down the cost of offshore wind. Catell said the consortium’s role is to do research and to support the development of the offshore wind industry in the United States.

 

Audience Questions

Q: Will wind turbines in New York be able to withstand a Category 5 storm?

Plummer said wind turbines are designed to withstand a Category 3 hurricane, and they have built into their permit applications an insurance fund that can pay for repairs in cases of catastrophic loss from a storm more severe. He said a Category 5 hurricane has a return period in excess of 100 years, while the design life of a wind farm is 30-35 years, so wind turbines are not designed to withstand a Category 5 storm because they are not expected to experience one. “Anything less than that up to a certain speed is just a really good day for producing a lot of wind power,” he said.

Q: What are the technological bottlenecks of offshore wind? How much are we actually investing in R&D to tackle these issues?

Wynter said one bottleneck is that a constrained transmission network. This issue can be tackled by building out more transmission, but end-use customers will end up paying for the investment, so Wynter said they are looking to new technologies as a way to evolve and adapt and to drive more power through their existing assets. 

“We’re looking at technologies like dynamic line rating technologies and other grid-enhancing technologies,” Wynter said. 

Catell said the National Offshore Wind Research and Development Consortium is investing $40 million in research and development focusing on construction (how you build turbines better and cheaper), modeling of wind (how you make it more efficient), and developing the delivery system and offshore wind industry. Catell said there are opportunities to get some funding for research, and they welcome bids for research on any of their projects. 

Q: What about research and development for materials of the turbines?

Plummer said we’re not funding research and development on this nearly enough. “Offshore wind is just so big. The physical characteristics of this push the limits of modern material science.” He said an example of this is that a 10 MW-producing wind turbine has blades with rotors that are 200 meters across and that can approach the sonic barrier. 

“There needs to be a lot of research done on continuing to advance this,” Plummer said. “This is a point at which New York stands at a really unique advantage [with NYSERDA].”

Q: Could someone address the issues with offshore wind and the Interior Department?

I think that what you’re referring to is what appears to be a delay with the new Secretary of the Interior, David Bernhardt, who decided not to approve the environmental impact statement for wind projects, off the coast of Massachusetts (the first large-scale project) because he wanted to look at the cumulative impacts of all the proposed wind farms,” said Knobloch. “And as a matter of public policy, that’s actually a pretty sound idea. But there is a lot of concern… about how long will that take.”

Knobloch said the primary federal player in offshore wind projects is the Department of the Interior (DOI) because its Bureau of Ocean Energy Management has primary responsibilities for any energy infrastructure in federal waters. Drawing on his experience as former Chief of Staff of the Department of Energy (DOE) under Secretary Ernest Moniz, Knobloch said during the Obama Administration, DOI and DOE announced the first national offshore wind strategy for the country, reflective of DOI’s regulatory authority and DOE’s “cheerleading role.” In the Trump Administration, former Secretary Zinke kept this moving forward, identified wind energy areas off of certain states, and held auctions of leases in those areas, and took forward steps on permitting. 

Vestal said offshore wind projects are complicated, and work is done not only by industry but also led by state and local governments. He said New York, Massachusetts, New Jersey, and other states have worked together over recent years to move forward conversation with the federal government on the advancement of new lease areas off the coast. He said New York was successful in getting some wind energy areas advanced, although they have not completed the project. He said they have also had success in working with agencies like the New York Coast Guard and the Army Corps of Engineers, who are not only involved with the permitting of the wind farm but are also integral in developing new port infrastructure and in looking at vessel traffic and cable landings.

“I would say, across the board, we’re still fairly optimistic that the federal government is just doing their homework to ensure that we have a justified and responsible process in place to support the development of future projects,” Vestal said.

Plummer said there is no one thing that can be done to debottleneck the offshore wind project approval process at the federal level because several agencies are involved and they do not always agree. 

“Part of our job is to patiently understand what each agency needs, going all the way back to their enabling legislation and regulation, and providing science-based evidence,” Plummer said.

“In continental Europe, there is usually a single permitting authority that grants a license to operate after a developer has won a competition and demonstrated a certain level of environmental diligence. In our case, we have to make that same case over and over and over again to multiple agencies.”

In the United States, there are not only multiple approvals but also multiple periods of public input19 different public comment periods so far for Ørsted’s South Fork Wind Farm, which will be serving New York State.

“It’s our job as responsible developers to be out front of this,” Plummer said. “And we don’t fear this. It’s not a bad thing. We end up with better projects when we get his input, and the projects will be designed and built and operated better with that degree of scrutiny.”

Q: What sort of regulatory roadmap has been developed for offshore wind? Either climate change is an emergency or it is not, and I haven’t heard anything about really solving these regulatory issues.

“I think the regulatory components are pretty much straightforward,” Wynter said. “I think the big issue is federal permitting, and that’s the piece that can bottleneck all of this. In terms of procurement of offshore wind, in terms of regulatory recovery on building the infrastructurethere are mechanisms in place for all of that. I think the big wild card…is really around the final step, which was federal authorization to build in federal waters.”

Plummer said he would agree with that and that states set the demand for offshore wind. Even with leadership by states, which have increased demand for offshore wind, he says developers still need to navigate a very complex federal bureaucracy of getting the wind farms built.

“And you’re right, it is at some points, at a human level, very frustrating that it takes so long to do something that feels so important,” Plummer said. “I live with this every day. But, nonetheless, we are building massive infrastructure in the public trust, and it’s incumbent on us and our regulators to be able to demonstrate to the public that that trust is well founded.

Wynter said the 25 GW of demand is driven by states, and state action is what will drive the U.S. offshore wind power market to be the fourth largest in the world. States have aggregated load so that they can move offshore wind plants to scale quickly. “As someone who is buying that from offshore wind developers, I’ve seen the cost come down a little more than half in three years,” Wynter said. “There is still a lot more to be done, but we are seeing that progress.”

Knobloch said we can’t overstate the sense of urgency of action on climate change. “We do need to accelerate our efforts across the board.” He said that it is important to note that offshore wind is relatively new on the scene in the United States and that regulatory agencies, states, and regional transmission organizations are playing catch up.

“I think whatever we can do to encourage the key regulatory authorities to continue to pick up their pace and to work across those entities, I think we are going to be better prepared to actually accelerate what we need to do.”

Vestal emphasized Governor Cuomo’s commitment to climate science and pushing a legislative agenda that supports that and said that at the state level, NYSERDA is doing all they can to respond to climate change and lead the offshore wind space for federal permitting.

Q: If technology shift is happening so quickly, how do you keep up?

Wynter said that National Grid thinks they can add value by building out the additional transmission that is needed. They are also speaking to all of the stakeholders and regulators. To make decisions early, ensuring that “infrastructure is an enabler and not an inhibitor.” They are starting with analyzing the entire transmission networks that they own (and others) to understand where the bottlenecks are going to be, and then they will share that information with decisionmakers.

Q: The most painful work to me in wind power is “curtailment.” What are the plans for energy storage?

Wynter said that they are looking for technologies to help them evolve and adapt, and to optimize their existing infrastructure. “We have to make sure that the whole network is extremely resilient,” he said. “We do see battery energy storage pairing up with large-scale renewables…”

He said they also acknowledge that we can’t solve the climate crisis by decarbonizing the electric sector to zero. “We have to go after transport and heat,” as well,” he said. He sees development of new types of storage for the offshore wind industry as work can help decarbonizing other sectors, we well.

Q: Cost for offshore wind – where are we now and where are we going?

Plummer said that in certain areas, offshore wind is already cheaper to build than anything else. “You put offshore wind head-to-head with a new combined cycle natural gas facility in the middle of Texas, and we’re going to lose. But that’s not the market that offshore wind is designed to serve.” 

He said offshore wind fares well in areas such as the Boston-to-Washington, D.C. corridor where it can be built cost-effectively, where there is a good wind resource, and where it is difficult and expensive to build other kinds of energy generation.

We think that over the coming the next 10-15 years, it will become the low cost, new build resource.”

Vestal said that costs are lower than they have expected them to be, due to the U.S. offshore wind industry “piggy-backing” on an offshore wind industry that has already matured in Europe. “From a cost perspective, we’re in a really great place.”

 


 

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amoulton@ourenergypolicy.org, (202) 805-4166